SYDNEY, July 17 (Reuters) – Asian stocks got off to a sober start on Monday as earnings season kicked into gear with Tesla’s listing but fears markets could overwhelm China’s economic data. .
China’s economy is forecast to grow just 0.5% in the second quarter, but the annual pace is expected to flatten to a projected 7.3% due to base effects.
With retail sales, industrial production and urban investment all expected to slow, the market expects the Chinese government to announce further stimulus measures soon.
Weekend data showed China’s new home prices were flat in June, the lowest result of the year.
With the risk of further weak results, MSCI’s broadest index of non-Japanese Asia-Pacific stocks (.MIAPJ0000PUS) fell 0.2 percent, following last week’s 5.6 percent gain.
Japan’s Nikkei Stock Average (.N225) was closed for a holiday, but futures traded broadly flat.
S&P 500 futures and Nasdaq futures both fell 0.2%, but posted significant gains last week.
Tesla is the first tech giant to report this week, while the likes of Bank of America, Morgan Stanley, Goldman Sachs and Netflix have busy earnings schedules.
U.S. retail sales data show non-auto sales expected to grow by 0.3%, continuing a slowing trend but strong enough to meet the market’s preferred soft-landing theme there is
“While we continue to expect a gradual recession to take hold heading into the end of the year, the path to a non-recessionary disinflation is starting to look more realistic,” said JPMorgan economist Michael Ferroli. there is,” he said.
“Fed officials expect the recent inflation trend to be welcome, but it would be reckless to declare victory when the unemployment rate is below 4% and core inflation is above 4%.”
Price of policy easing in 2024
As a result, the market still suggests a roughly 96% chance that the Fed will raise rates this month, but only about a 25% chance of another rate hike by November.
It also priced in at least 110 basis points of easing from next March, with two-year yields dropping 18 basis points last week.
This expected policy easing is much more aggressive than that priced in for other advanced economies, which is the main reason for the US dollar turning tail.
The dollar stabilized slightly at 138.75 yen from a bottom of 137.25 yen, following last week’s 2.4% decline. The euro was strong at $1.1223 and rose 2.4% last week, surpassing the previous year-to-date high of $1.1096.
The pound rose 1.9% last week to hover at $1.3091, with investors anxiously awaiting UK inflation data later this week, with a further high result raising the risk of even more significant rate hikes. It will be.
The dollar index hovered at 99.989 after falling 2.2% last week.
Falling bond yields have supported non-yielding gold at $1,952 after having its best week since April.
Oil prices have also been supported by OPEC supply cuts, with oil prices taking profit after three straight weeks of gains.
Brent crude fell 58 cents to $79.29 a barrel early Monday, while US crude fell 55 cents to $74.87.
Reported by Wayne Cole. Edited by Lincoln Feast.
Our criteria: Thomson Reuters Trust Principles.
